Will Rhode Acquisition Become ELF's Key Growth Catalyst in FY26?

Core Insights - The Rhode acquisition is a significant growth catalyst for e.l.f. Beauty Inc. in fiscal 2026, contributing $52 million to net sales in Q2 and setting a record for the largest launch in Sephora North America's history, surpassing the previous record by 2.5 times [1][9] - Management anticipates Rhode will contribute 22 percentage points to net sales growth in the second half of fiscal 2026, enhancing the company's overall revenue trajectory [2] - Rhode is projected to generate $200 million in revenues over the eight months post-acquisition and approximately $300 million on a 12-month annualized basis, reflecting a 40% year-over-year growth rate [3] Expansion and Strategy - The acquisition enhances e.l.f. Beauty's international opportunities, with nearly 20% of Rhode's direct-to-consumer sales coming from outside the U.S. Recent launches in Sephora U.K. and other global markets aim to expand reach [4] - e.l.f. Beauty is investing in brand-building, digital engagement, and retailer partnerships to support Rhode's growth, enhancing visibility across direct-to-consumer and wholesale channels while maintaining long-term margin improvement [5] Financial Performance - e.l.f. Beauty's shares have declined 34.5% over the past six months, contrasting with the industry's growth of 18.1%, while competitors Nu Skin and Coty have seen mixed performance [6] - The forward 12-month price-to-earnings ratio for e.l.f. Beauty is 22.16, lower than the industry average of 28.20, indicating a premium valuation compared to Nu Skin and Coty [8] - The Zacks Consensus Estimate for e.l.f. Beauty's fiscal 2026 earnings indicates a year-over-year decline of 13.6%, with a projected growth of 27.3% for fiscal 2027 [11]